Leading Economic Indicator
Macroeconomics and end use markets
Playback tab for macro indicators: 9 of 20
the number of New unemployment claims It rose by 5,000 to 213,000 during the week ending September 17 – the first increase in seven weeks. Continuing claims fell 2,200 from the previous week’s level, to 1,379,000. Last week’s new jobless claims and continuing claims were revised lower, reflecting the strength of the labor market. The insured unemployment rate was unchanged for the week ending September 10 at 1.0%.
the total The beginnings of housing It jumped 12.2% to 1.58 million after three months of consecutive declines. While the reversal was largely unexpected, levels remained below the cycle peak in December 2021. Most regions posted strong showings this month except for the Northeast, where housing is down. While activities increased across all sectors, multi-family outperformed single-family with the best monthly performance in 35 years. However, with the cost of home ownership continuing to rise, housing starts reversed trend again in September. Looking forward building permitsHowever, it was down 10.0% to 1.52 million units on a seasonally adjusted annual basis with all regions posting losses. This was the fifth consecutive month of decline since March 2022. While the weakness came from both parts, the erosion of affordability had a greater impact on single households than multi-family. High mortgage rates will continue to put downward pressure on construction activities going forward. Home Builders Confidence It fell for the ninth month in a row in August. The Wells Fargo/NAHB Housing Market Index fell 3 points to 46, indicating that homebuilders are becoming increasingly pessimistic as mortgage rates exceed 6% and home building costs remain high.
As affordability deteriorates as mortgage rates rise, Existing Home Sales It fell 0.4% in August, which is still 19.9% higher year on year. Sales fell for the seventh consecutive month to 4.80 million. The average sales price in all regions was up and 7.7% higher than the previous year. The inventory of existing unsold homes decreased at the end of the month after building the previous five months. NAR Chief Economist Lawrence Yun notes that “the housing sector is the most sensitive and exposed to direct impacts from Fed rate policy changes.”
Conference Board Leading Economic Indicator (LEI) It fell 0.3% in August, slightly worse than expected, and after a 0.5% decline in July. This was the sixth consecutive decline. The index fell 2.7% compared to the previous six months, a reflection of 1.7% growth over the previous six-month period. The LEI fell 0.9% year over year, the first annual decline since early 2021. The Conference Board expects a recession in the coming quarters.
Economic Outlook Survey
- The outlook for 2022 and 2023 continues to deteriorate as expectations of further interest rate hikes rise as the Federal Reserve seeks to control inflation. Growth is expected to continue to slow until mid-2023.
- The forecast for US GDP has been revised down again and is now expected to grow by just 1.7% in 2022 as the post-lockdown recovery slowed rapidly amid rising inflation and aggressive interest rate increases. In 2023, forecasters continue to expect US growth of 0.5%, which is well below the long-term trend.
- Consumer spending growth is expected to weaken to a pace of 2.4% y/y in 2022 before slowing further to a gain of 0.7% in 2023.
- While also slowing, business fixed investment will be a larger contributor to GDP growth in 2022 with an expected gain of 4.2%. In 2023, growth in business investment slowed further to a 0.8% increase, sharply lower than last month’s forecast.
- With much weaker growth in the second half of the year, industrial production is expected to rise by 4.2% in 2022 and decline by 0.3% in 2023, a reflection of expectations of a slight gain last month.
- High borrowing costs and ongoing supply chain problems continue to hamper vehicle production and sales. As a result, the forecast for sales of light vehicles fell again to 14.0 million in 2022 (down from 2020 when automakers were closed for two months) and rose to just 15.0 million in 2023.
- With mortgage rates soaring above 6%, expectations for interest rate-sensitive housing were lower as well. Housing starts are now expected to reach 1.57 million in 2022, before dropping to 1.40 million in 2023.
- The unemployment rate is expected to average 3.7% in 2022 (unchanged from last month’s survey) and 4.3% in 2023, up from the August survey.
- With some pullback in the July data, expectations for gains in consumer prices slipped with forecasters forecasting inflation of 8.0% in 2022, before tapering back to a pace above the trend of 3.9% in 2023, which was higher than last month’s poll.
- Compared to last month, expectations for interest rates (the 10-year Treasury) have risen as persistent inflation increases the likelihood of aggressive Fed tightening.
Economic Outlook Survey – Global
- Forecasters have lowered their forecasts for global economic growth. Global GDP is expected to increase by 2.8% in 2022 and 2.4% in 2023.
- Industrial production, still hampered by ongoing supply chain challenges and other headwinds, will rise 3.5% in 2022 and 3.1% in 2023.
- In addition to ongoing supply chain challenges, slower growth in global GDP and industrial production will be reflected in a weaker outlook for global trade. After a 10.5% rebound in 2021, global trade volume is expected to increase by 3.5% in 2022 and 2.8% in 2023, which is slightly higher than previously forecast for 2022 and the same for 2023.
Energy prices were lower over the past week. Oil fell after the Federal Reserve’s interest rate announcement and natural gas prices fell in the US with higher production and a seasonal decline in demand. The total number of rigs and lubes increased by three to 761 during the week ended 9/16.
For chemistry work, indicators still mention a yellow banner for basic and specialty chemicals.
According to data from the American Railroad Association, chemical rail car loading It rose 8.2% to 32,977 during the week ended September 17. Uploads are up 0.6% year-over-year (13-week math average), 3.6% YTD, and have been on the rise for six of the past 13 weeks.
The United States Chemical Production Regional Index (US CPRI) It was flat in August after rising 0.2% in July and falling 0.1% in June, according to the American Chemistry Council (ACC). Chemical production was higher in all regions, except for the Gulf Coast. The American CPRI is measured as a three-month moving average (3MMA). Compared to August 2021, chemical production in the United States was ahead by 1.3%, faster growth than last month. Chemical production was higher than a year ago in all regions except the Gulf Coast, which was 1.5% lower.
On the basis of 3MMA, chemical production was mixed within the sectors in August. There were gains in the production of coatings, adhesives, and other specialty chemicals, consumer products, manufactured fibers, synthetic dyes and pigments, and industrial gases. These gains were offset by lower production of plastic resins, inorganic chemicals, organic chemicals, synthetic rubber, crop protection chemicals and fertilizers.
Since almost all manufactured goods are produced using chemistry in some form, manufacturing activity is an important indicator of chemical demand. Manufacturing output rose 0.1% in August (3MMA). 3MMA’s manufacturing trend has been mixed, with gains in apparel production, aerospace, rubber products, oil and gas extraction, plastic products, semiconductors, computers and electronics, petroleum refineries, foundries, and automobiles.
A note on color codes
Logo colors represent notes about current conditions in the macroeconomics and business chemistry. For macroeconomics, we’re keeping a running tab of 20 indicators. The banner color for the macroeconomic section is specified as follows:
Green – 13 or more pluses
Yellow – between 8 and 12 positive points
Red – 7 positive points or less
For the chemical industry, there are fewer indicators available. As a result, we rely on judging whether production in industry (defined as chemicals excluding pharmaceuticals) has increased or decreased three consecutive months.
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